Nickel Digital Asset Management CEO Anatoly Crachilov said Bitcoin’s increasing acceptance by the investment community will â€œpropel a natural widespread demand for the assetâ€� and allow demand to outstrip supply
Despite its surge in 2020, Bitcoin is still the most undervalued cryptocurrency asset at the start of 2021, according to analysis from oneÂ asset manager.
Anatoly Crachilov, founding partner and chief executive of Nickel Digital Asset Management, as investment firm specialising in linking traditional finance to the crypto sector, told Proactive that Bitcoinâ€™s increasing acceptance by the investment community will â€œpropel a natural widespread demand for the assetâ€� and that the finite and â€œinelastic natureâ€� of the Bitcoin supply (only 21mln will ever exist) means demand will outstrip supply and subject the price to â€œupward pressureâ€�.
Crachilov continued,Â saying that Bitcoinâ€™s first mover advantage as the first notable cryptocurrency has developed a â€œpowerful network effect, which is difficult to match by other crypto assets, and will further drive the adoptionâ€�. The CEOÂ added that Bitcoinâ€™s â€œtechnical advantageâ€� over real-world assets such as gold will also â€œcreate efficient competition for the store of value function, eating into goldâ€™s market shareâ€�.
â€œOther crypto assets, such as Ethereum and [decentralised finance] enabling coins will also experience growth alongside bitcoin (and may outperform in the short term), but their value propositions remain very different to bitcoin and have a greater reliance on untested technology solutions. These coins will attract only a fraction of the institutional capital coming into the spaceâ€�, CrachilovÂ said.
The CEOÂ added that while he alsoÂ expected â€œactive regulatory adoption of stablecoin and a shift towards fully-backed, fully regulated coins which can be used as a means of everyday paymentâ€�, this would not undermine the investment thesis for Bitcoin as a â€œnon-discretionary asset with immutable supply, offering inflation and currency debasement protectionâ€�.
â€œThe digital form of fiat [currency], while dramatically improving asset transfer efficiency, is unable to provide protection against supply increasing at the whim of controlling authority, hence cannot compete efficiently for the long term store-of-value functionâ€�, Crachilov said.
Crypto will hit the mainstream this year
Meanwhile, Bradley Duke, chief executive of ETC Group, which in June last year launched the worldâ€™s first centrally cleared Bitcoin exchange traded crypto (ETC), said the digital currency and other cryptos will become â€œmuch more mainstreamâ€� in 2021.
The CEO highlighted â€œmore corporates using cryptocurrencies for their treasury/reserves needsâ€� as well as more institutional investors gaining exposure to the asset class.
Duke also said that the coronavirus (COVID-19) pandemic has caused a â€œperfect stormâ€� for crypto assets.
â€œThe stimulus packages rolled out have led to growing concerns about inflation, currency depreciation etc and the need for more diversified portfolios â€“ all of this plays well for crypto assetsâ€�, the CEO said, adding that better infrastructure will mean there will also be improvements around regulation of the sector and custodial services for the assets.
Bitcoinâ€™s value was up 9.1% at US$34,259 in mid-afternoon trading in London on Wednesday.
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